Gaming Compliance
February 2008

What is a casino license worth? To a gaming company, the answer is simple: everything. Without a gaming license, the company’s ability to earn revenues is exhausted. Regulatory compliance programs are simply an insurance policy for the company’s future. As gaming continues to expand, the future success of certain companies to earn either licenses or franchises could be directly tied to the company’s regulatory history. Companies with substandard compliance records could find themselves disadvantaged when they attempt to secure rights in or licenses from new jurisdictions. After all, the best predictor of a company’s future compliance is its past. Moreover, a good compliance program can literally save the company from the industry’s version of the death penalty — the revocation of its gaming license after a disciplinary action.

A compliance program is an internal program adopted by a casino company to assure compliance with all laws and regulations. For casino companies, the program has a particular emphasis on gaming laws, regulations and general regulatory policies. Successful compliance plans embody the commitment of the company to regulatory and legal compliance and focus on preventing regulatory violations before they occur. They identify areas of concern that might adversely affect the licensee’s reputation. They minimize the risk of being the subject of criminal or regulatory action and maintain the company’s reputation in the public markets. In the unfortunate circumstance that a company does find itself faced with criminal or regulatory problems, the demonstration of a compliance program and a commitment to that program can serve as a mitigating circumstance.

Regrettably, many casino companies, senior staff members and boards of directors simply have little knowledge of the compliance function and, therefore, lack a commitment to the compliance process. More often than not, upper management will rely on persons under them to understand the basic objectives of gaming laws and how they apply to the business. The resulting decisions are thus recklessly based on what upper management may perceive as “acceptable” or “standard” in the industry. What’s more, there is a false expectation that compliance is the responsibility of the regulators. This is simply not possible. Regulators do not have the resources, institutional knowledge, motivation or corporate cooperation required to create an effective compliance program.

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